Fees Structure

Transaction Fee

As part of ensuring the hedging of user's funds through Eonian Options, the protocol incurs a transaction fee when trading on Otto Exchange. This fee amounts to 0.05% of the transaction value and is paid directly to Otto Exchange, the platform where the protocol trades.

Hedging Fee

The protocol hedges the user's funds by taking positions on Eonian Options with the same strike price, long puts, and short calls. The hedging fees are calculated as the difference between the premium received by the protocol from selling the Eonian Call Options and the premium paid for buying the Eonian Put Options.

Protocol Fee

To ensure the sustainability of the protocol and maintain transparency in our operations, we have implemented a Protocol Fee that will be allocated towards the development and growth of Otto. It takes the form of a transaction fee because our priority is to safeguard the user's collateral and avoid any risk exposure, unlike other platforms that generate yield by using the user's collateral. However, we will not apply this fee until USDO reaches a specific market cap.